The Phone Companies Still Don't Get It

THE PHONE COMPANIES STILL DON'T GET IT
[SOURCE: BusinessWeek, AUTHOR: Mark Gimein]
[Commentary] Welcome to Telco Land, a strange country where the biggest players talk more and more about innovation yet approach new ideas with baby steps, build little themselves, and when they think about technology are apt to believe it's a threat they have to fight. In fact, in San Antonio, John Kirby, the architect of Project Lightspeed, neatly managed to dispel any confusion about the status of engineering at the company when, after clarifying what it is he does, he explained that when it came to big new projects, "marketing dreams it up, and then I have to design it." The old AT&T had a world- class research operation; its successors -- the new AT&T and Verizon -- don't. One of the signal facts of the communications revolution is that virtually all the new technologies that made it possible were developed outside the phone world. Last year, Verizon's revenue came in at nearly $80 billion. AT&T (without BellSouth or Cingular) had revenue of $44 billion. And yet while Intel spent $5.1 billion last year on research and development, AT&T spent just $130 million. The word "research" doesn't even appear in Verizon's annual report. So isn't it a little odd to hear the CEO of a company the size of AT&T talk about needing to get bigger to have the resources to innovate? To some extent, Verizon and AT&T have been forced to take innovation seriously and move into offering TV and improved broadband. A world in which big telcos competed with big cable companies was something envisioned as far back as the 1996 Telecom Act. It only became a reality when Internet-based phone services allowed cable companies to offer the dreaded "triple play" of television, broadband, and phone, putting AT&T and Verizon on the defensive. But even as they've pushed into this new area, in others the telcos' instinctual response has also been to fight new technologies rather than foster them.
http://www.businessweek.com/magazine/content/06_31/b3995070.htm?chan=inn...